Talking Points

Hadley Capital and Gillinder Family Recapitalize Gillinder Glass

Gillinder Glass, a sixth-generation custom glass manufacturer, and Hadley Capital, a Chicago-based investment company, are partnering to create a platform to support Gillinder’s future growth plans.  As part of the transaction, members of the company’s management team will become owners of Gillinder Glass and Charlie Gillinder will continue as the company’s President.

“Our partnership with Hadley Capital will allow Gillinder Glass to continue to manufacture world-class products in Port Jervis and provide the support and capital required to grow our business into new markets in the U.S. and abroad,” said Charlie Gillinder, President of Gillinder Glass.

“Gillinder Glass is a market leader with a long history of providing innovative solutions to complex problems. The company is led by an experienced and dedicated team and has an amazing group of people that make Gillinder Glass a success. Hadley Capital is thrilled to support Charlie, Fred and the rest of the Gillinder Glass team with their growth plans for the next 150 years,” added Scott Dickes, Managing Partner of Hadley Capital.

Hadley Capital has a wealth of experience working with family-owned businesses on recapitalizations and generational transfers.  Please contact us if we can help your family-owned business.

More About Gillinder Glass

Established in 1861, Gillinder Glass is a custom glass manufacturer that specializes in custom-molded, hand-pressed, clear and colored glass as well as optical prism processing and engineering.  Gillinder Glass is based in Port Jervis, New York.

The company’s web address is


Hadley Capital Acquires S&S Filters

Hadley Capital recently acquired S&S Filters, a manufacturer of specialty filter bags and related products. Hadley Capital acquired the company from its founder, allowing him to transition out of day-to-day management and his achieve his personal financial goals.

Hadley Capital assists the founders of small businesses with transition through the sale of their companies. If you are a small business owner that is considering a sale of your company, please contact us to see if we can help you realize your goals.

More about S&S

S&S Filters is a manufacturer of specialty filter bags and related products. Pharmaceutical companies, food products manufacturers and other industrial producers such as asphalt plants use S&S’s filters to recover small particles in static sensitive, high temperature and/or chemically aggressive environments. S&S is known for its deep product know-how, large stock of high performance fabrics, high quality fabrication and fast delivery.

S&S is based in Union, NJ, near New York City.  The Company’s websites are and

Hadley Capital Acquires Pneumatic Conveying, Inc.

Hadley Capital recently acquired Pneumatic Conveying, Inc., a manufacturer of  turnkey and custom pneumatic conveying systems.  Hadley Capital acquired the business from Wayland Gillespie, in partnership with Wayland’s son, Warren Gillespie.  Wayland founded Pneu-Con nearly 30 years ago.  Hadley Capital and Warren Gillespie plan to develop a long-term plan for building on Pneu-Con’s reputation for deep engineering expertise and manufacturing high-quality systems that perform to specific application demands.

Hadley Capital has a wealth of experience working with family-owned businesses on generational transfers.  Please contact us if we can help your family-owned business.

More about Pneu-Con

Pneu-Con designs, manufactures and installs turnkey and custom pneumatic conveying systems that serve as a critical component of dry bulk material handling systems.  Pneu-Con serves a broad spectrum of the commercial economy including food, plastic, pharmaceutical, nutraceutical, chemical, and agriculture industries, among many others.  Pneu-Con is based in Ontario, California, east of Los Angeles.

The Company’s web address is

Hadley Capital Raises Third Small Company Fund

Earlier this year Hadley Capital announced the closing of our third small company fund.

For nearly 20 years, we have focused exclusively on buying small, profitable companies. We have been very successful at helping families address generational transitions, founders complete recapitalizations and management teams buy out inactive owners or founders. Read some of our success stories.

Just like in our prior funds, we are big investors in our third fund and our interests are well aligned with our investors and the business owners and management teams that we work with to improve and grow small companies.

If you own or represent a small company that meets our criteria, please contact us to discuss how we can help your company achieve its goals.

Hadley Capital Acquires GT Golf Supplies

Hadley Capital recently acquired GT Golf Supplies in partnership with its founder, Craig Pollard, and the company’s management team. Craig approached Hadley Capital about partnering with him in order to develop a long-term plan for growing the company while also providing him with a mechanism to achieve some personal financial planning goals.

GT Golf Supplies sources and sells grips, tees and other accessories to golf courses, golf course management companies and off-course retailers.  The Company is known for its broad product offering, short lead times, competitive pricing and excellent customer service.  GTG is based in Vista, California, near San Diego, with a second warehouse located near Charleston, SC.  The Company’s web address is

GT Golf Supplies is actively seeking acquisitions of distributors of golf accessory products. If you own or represent a company that may be a fit with GT Golf Supplies please contact us.

Acquisition Profile – Niche Product or Service Companies in Midwest

Hadley Capital is working with an experienced executive to identify and acquire niche product or service companies with the following characteristics:

  • Market leadership in a niche or expanding market segment
  • Branded products or services with strong market awareness
  • Located in/around Chicago, Milwaukee or Cincinnati or easily relocatable
  • Revenue of $5 – $15 million and a history of profitability
  • Sample markets of interest include automotive or motorcycle parts, consumer products or services, car wash equipment and operators, B2B or B2C niche rental businesses, financial technology and applications, among others

Our executive partner has broad senior management experience and is looking for a business to invest in and subsequently manage in partnership with a strong team.

Contact us if you own or represent a company that would be a good fit for this targeted acquisition search. Hadley Capital will pay success fees for select introductions.


Acquisition Profile – Value Added Distributor

Hadley Capital is working with an experienced executive to identify and acquire value added distributors with the following characteristics:

  • Market leadership in a niche or expanding market segment
  • Source of consolidated supply for a large number of products
  • Large, fragmented customer base that relies on distributor for products and service
  • Sells owned and distributed product
  • Leverages systems to improve service, delivery and profitability
  • Service component of sale protects business from digital disintermediation
  • Revenue of $5 – $35 million and a history of profitability

Hadley Capital has a successful track record of acquiring and growing value added distributors in industries as varied as gardening seeds, beekeeping products, and eyewear.

Our executive partner has experience in a wide variety of distribution businesses from healthcare to industrial products and a deep finance background.

Contact us if you own or represent a company that would be a good fit for this targeted acquisition search. Hadley Capital will pay success fees for select introductions.

Acquisition Profile – Industrial Products Manufacturer

Hadley Capital is working with an experienced executive to identify and acquire an industrial products manufacturer with the following characteristics:

  • Market leadership in a niche or expanding market segment
  • Branded products with strong market awareness
  • Multiple channels of distribution (direct, distributor, catalog, etc.)
  • Proprietary, company-owned product designs
  • Revenue of $5 – $35 million and a history of profitability
  • Sample company types include capital equipment manufacturers, material handling products, packaging products and packaging equipment manufacturers, and building products

Our executive partner has more than 20 years experience in diverse industrial markets, leading smaller industrial companies and building and empowering teams to grow revenues and improve operations.

Contact us if you own or represent a company that would be a good fit for this targeted acquisition search. Hadley Capital will pay success fees for select introductions.

Mezzanine Finance

My last post on acquisition financing covered senior debt. This post will cover Mezzanine debt. Specifically, I would like to talk about how mezzanine debt is structured and what the implications are for small businesses that use it.

The word mezzanine is defined as the “partial story between two main stories of a building”. In this case, the two main “finance stories” of a company are senior debt and equity. Mezzanine debt then is the middle level or “mezzanine” between senior debt and equity. From a borrower’s perspective, mezzanine finance is more expensive than senior debt and less expensive than equity. Mezzanine debt is more expensive than senior debt because 1) it is subordinate to senior debt (meaning in a liquidation the senior debt lender will be paid in full before the mezzanine lenders sees a dollar) and 2) it typically does not require any principal payment until the end of the term loan. This structure obviously creates more risk for the mezzanine lenders and as a result they charge higher interest rates.

Mezzanine loans are typically priced anywhere between 15–20%. There are three main components off mezzanine debt: 1) current interest 2) PIK Interest and 3) Warrants. As mentioned, Mezzanine loans are typically interest only with the principal due at the end of a five or seven year term. Current interest payments are typically due monthly or quarterly. For example, a $3 million 15% current pay interest mezzanine loan with a 5 year term would look something like this:

Screen Shot 2015-10-13 at 2.37.36 PM

In some cases mezzanine lenders will PIK (Payment-in-Kind) a portion of the interest payment and add it to the principal payment of the loan. In this case, there will be two buckets of interest: current cash interest and PIK interest. Here is what it would look like if a mezzanine lender offered a $3 million with 14% current cash interest and 2% PIK interest:

Screen Shot 2015-10-13 at 2.38.44 PM

Mezzanine debt can also frequently include warrants, which are very similar to equity options. Warrants give lenders equity upside when the borrower performs well. Warrants typically represent 1–5% of the fully diluted ownership of the company.

Due to the high interest rates associated with mezzanine debt, we work with management to pay it off sooner rather than later. If a company is performing well and has plenty of cash, we will use some cash to pay down the mezzanine debt. We typically use 1x–1.5x EBITDA (or cash flow) of mezzanine debt in an acquisition. So if we buy a company for 5x EBITDA, a typical capital structure might be 2x senior debt, 1x mezzanine debt and 2x equity. We feel 3x total leverage (2x senior + 1x mezzanine) is an appropriate amount of debt for a small company.

Financial Reporting

Small business owners are often apprehensive about the changes that may occur when their business is acquired by a private equity firm.  When Hadley Capital acquires a company we do not look to make immediate changes to the business. However, financial reporting is something that does change after the deal closes. This typically means two changes for a business: 1) monthly reporting is completed in a more timely manner and 2) additional financial reporting is required.

Timely Monthly Reporting.

Hadley Capital receives monthly financials (income statement and balance sheet) from our portfolio companies within 30 days after month end. Most small businesses are not used to producing monthly financials this quickly. While this can be adjustment, our portfolio companies eventually see the benefits of timely reporting. It is much easier to manage a business when you have timely data.

Additional Financial Reporting.

Borrowing Base Certificate. All of our portfolio companies have a revolving line of credit to manage working capital. A line of credit is supported by a borrowing base certificate. A borrowing base lists a company’s eligible accounts receivable and inventory and dictates how much the company can borrow. Many small businesses are not accustomed to providing monthly accounts receivable aging reports and monthly inventory reports. However, the benefits of access to additional capital (via a line of credit) are greater than the administrative burden of creating these reports.

Financial Covenant Calculations. Banks and mezzanine lenders use financial covenants to monitor the performance of a borrower. These lenders receive quarterly financial covenants calculations from the borrower. Financial Covenants give the lenders a heads up if the financial standing of the borrower has changed over a given period of time. For example, one common financial covenant is Total Leverage. The Total Leverage covenant measures the Total Debt (senior debt + mezzanine debt) in relation to the trailing twelve months (TTM) of EBITDA. So if the Total Leverage covenant is Total Debt must be less than 4.0x TTM EBITDA, the borrower has to perform this calculation each quarter and send the results to the lender in a covenant compliance certificate. If the Total Leverage is less than 4.0x then the borrower is in compliance with the covenant. However, if Total Leverage goes above 4.0x, the borrower is not in compliance and the lender will want to sit down with borrower and understand why things have changed. Covenant calculations are not difficult, but most small businesses are not used to completing them so it can take some time getting used to.

Individually none of these financial reporting requirements are a big deal, but collectively they can seem like a lot to a small business. However, we have been through the process many times and we work with our portfolio companies to make it a smooth transition. The lenders that work with our portfolio companies typically require our companies to submit a monthly borrowing base certificate and quarterly financial covenant certificates.

Older Posts »